The International Monetary Fund (IMF) estimated that average annual oil prices would be $41.7 a barrel in 2020 - a decrease of 32% from the 2019 average - and $46.7 a barrel in 2021.
In its latest World Economic Outlook released on Tuesday, the IMF recalled that oil prices declined by 60% between February and April 2020 from the pandemic, which led to a collapse in global oil demand. It also underscored concerns over storage capacity that highlighted the elevated uncertainty prevailing in the oil market, as the COVID-19 pandemic is not yet under control.
“Risks, however, are broadly balanced,” the IMF considering the upside and downside risks.
Escalating geopolitical events in the Middle East and faster containment of the pandemic as well as excessive cuts in oil and gas upstream investments and further bankruptcies in the energy sector were among the upside risks.
The biggest downside risk, it said is a renewed slowdown in global economic activity, as large inventories remain a concern. Other downside risks for oil prices include stronger oil production growth in several non-OPEC+ countries, a faster normalization of Libya’s oil production, and a breakdown of the OPEC+ agreement.
By Sibel Morrow and Firdevs Yüksel